The CICOPA member in the UK, Co-operatives UK, has recently published a research study carried out by Professor Virginie Pérotin of Leeds University Business School, under the title of “What do we really know about worker co-operatives?” It looks at two decades’ worth of international data on worker owned enterprises.

1 March 2016

Traditionally viewed as small enterprises and specialised and undercapitalised organisations by many economists, the study breaks those stereotypes and claims that promoting worker cooperatives could improve employment in local communities and therefore health and social expenditure and tax revenue. The study mainly measures the size, sector distribution, innovative strategies and productivity of these enterprises.

Evidence shows that worker cooperatives can be larger than conventional businesses because they were larger at the moment of their creation or because they grow faster and/or survive longer than conventional firms. For example, in France, the percentage of worker cooperatives that have 250 workers or more is more than twice that of other firms with 250 employees or more. Another commonly held idea is that worker cooperatives are only suited to particular industries (for example, industries with low capital intensity or low capital requirements). Worker cooperatives can indeed be found in most industries, although differences vary across countries.

The study explains that in response to a decrease in demand, worker cooperatives are more likely to adopt strategies such as pay adjustments, rather than employment adjustment. This implies that they may preserve jobs better during an economic downturn. As a consequence, worker cooperatives survive at least as long as other businesses and have more stable employment.

With regards to the productivity of these enterprises, the study states that worker cooperatives are more productive than conventional businesses, with staff working “better and smarter” and production being organised more efficiently. Furthermore, since worker cooperatives are employee owned and run, the workers have far more say in the business, from day-to-day concerns through to major strategic issues, than in traditional enterprises. “A job in a worker cooperative probably is particularly valuable, since it is a job in which the worker has a say in decisions that affect employment risks” says the report.

The capital intensity in worker cooperatives is lower than that of conventional firms, whilst at the same time, cooperatives keep a higher level of revenue in the firm than conventional businesses, according to the study. An important characteristic that is at the very heart of worker cooperatives is the fact that a minimum percentage of income is retained annually and that this is provided for by law.

In her report, Virginie Pérotin says that: “What the data on different models of business show is that worker owned businesses often out-perform conventional firms - and the reason is that the people who work in them control the business and want it to continue to provide good and meaningful employment.” She also goes on to add that: “The boost to productivity, for example, stems from the workers having a say in decisions and owning the business, so they work harder and make better informed decisions.

Employee-owned businesses provide good quality, stable employment, which is likely to have beneficial effects on local communities”.

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